Standing Committee E

[Mr. Peter Atkinson in the Chair]

Health and Social Care (Community Health and Standards) Bill

John Hutton: I beg to move,
That— 
 (1) in addition to the sittings provided for by the Order of the Committee of 13th May 2003, the Committee shall meet on Wednesday 4th June at 8.55 am and 2.30 pm; 
 (2) in the Table in that Order, for the entries relating to the sitting on 22nd May at 2.30 pm and the sittings on 3rd June, there shall be substituted— 
 '22nd May (2.30 pm) 
 Clause 1, Schedule 1; Clause 2, Schedule 2; Clauses 3 to 25; Schedule 3; Clauses 26 to 32; Schedule 4; Clauses 33 to 35; new Clauses and new Schedules relating to Part 1. 
 — 
 3rd June (10.30 am) 
 Clause 1, Schedule 1; Clause 2, Schedule 2; Clauses 3 to 25; Schedule 3; Clauses 26 to 32; Schedule 4; Clauses 33 to 35; new Clauses and new Schedules relating to Part 1. 
 — 
 3rd June (4.30 pm) 
 Clause 1, Schedule 1; Clause 2, Schedule 2; Clauses 3 to 25; Schedule 3; Clauses 26 to 32; Schedule 4; Clauses 33 to 35; new Clauses and new Schedules relating to Part 1. 
 7 pm 
 4th June (8.55 am) 
 Clause 36; Schedule 5; Clause 37, Schedule 6; Clause 38, Schedule 7; Clauses 39 to 41; Clauses 43 to 65; Clauses 72 to 88; Clauses 99 to 105; Clauses 107 to 109; Clause 111; Clauses 113 to 128; Clauses 133 and 134; Schedule 8; Clauses 135 and 136. 
 — 
 4th June (2.30 pm) 
 Clause 36; Schedule 5; Clause 37, Schedule 6; Clause 38, Schedule 7; Clauses 39 to 41; Clauses 43 to 65; Clauses 72 to 88; Clauses 99 to 105; Clauses 107 to 109; Clause 111; Clauses 113 to 128; Clauses 133 and 134; Schedule 8; Clauses 135 and 136.
 If hon. Members have had an opportunity to study the motion, they will have seen that it proposes, first, to extend the time that the Committee has to debate part 1 of the Bill. Instead of concluding our deliberations today at 5 o'clock, we propose delaying the closure of the debate on part 1 until the end of the two sittings of the Committee on Tuesday 3 June. Secondly, it proposes an additional two sittings for the following day, Wednesday 4 June. The Opposition requested that we have 10 Committee sittings to consider part 1, and that is what the programme motion provides. 
 I emphasise that it is our intention to ensure that Committee members have the fullest possible opportunity to examine part 1, as the radical proposals that it contains are controversial. It is necessary for the Committee to have the fullest opportunity to study all the provisions in part 1, and therefore it is important that the motion of the Programming Sub-Committee be supported today.

Cheryl Gillan: I am grateful to the Minister for moving the motion. It was agreed that of the 20 sittings on this Bill, 10 would be
 allocated to the clauses on foundation hospitals. I am disappointed that the Government did not stick to the first agreement, choosing another programme at a later stage. However, the Committee is grateful that the Minister has rectified that and has given us the 10 sittings that we originally requested.
 I also wish to place on record that, depending on the progress that the Committee makes on scrutinising the Bill, I rely on the Government to revisit the programme if necessary. The Bill should have full scrutiny if at all possible, unlike so much legislation that passes through the House, large chunks of which remain unscrutinised by any Committee. 
 We have agreed to sit twice on a Wednesday in order to get the sittings that we originally requested, which the Government failed to give us in the initial programme motion, but that could cause timetabling conflicts. I am not making a party political point, but sitting on Tuesdays, Wednesdays and Thursdays can put tremendous strain on the Opposition, as the Under-Secretary and the Minister know, in preparing for a rapid roll-forward on complex legislation. On Wednesdays, there are many other activities in the House, not least Select Committee meetings and important evidence sessions, which may involve members of this Committee. Even more conflicts are being forced on Members of Parliament in order for them to fulfil their roles as scrutinisers of Government proposals for legislation. 
 Both Ministers will agree that concentrating the timetable into Tuesdays, Wednesdays and Thursdays creates problems. I hope that they will bear with us if, from time to time, some Conservative members of our eminent Committee have to leave to attend to other duties. However, I repeat that I am grateful to the Minister for reinstating the original agreement, and I support the programme motion.

Evan Harris: I shall start with a housekeeping matter. I and other hon. Members have had difficulty hearing some of the contributions, probably because the microphones need to be reset.
 As regards the programme motion, we believe that at least six sittings are required to discuss part 2 of the Bill. I am still not clear why Wednesday sittings have been proposed. My understanding is that those sittings can be used to complete our discussions on part 1 if we do not make sufficient progress, even with the two extra sittings. I understand that if debate on part 1 finishes in good time, it may not be necessary to have additional Wednesday sittings. However, if it seems that discussions on part 2—to which the Government have tabled important additional amendments—will not be completed on time, the option still remains to sit on a further Wednesday, thus ensuring that the original six sittings proposed for part 2 are retained. 
 On four occasions we have said that our main requirement is to ensure that there is adequate scrutiny of part 2, particularly on the Commission for Social Care Inspection provisions, which follow the Commission for Healthcare Audit and Inspection provisions and which may be squeezed out. I hope that the Minister will assure us that, come what may, 
 there will be at least six sittings on part 2, preferably on Tuesdays or Thursdays.

John Hutton: I am grateful to the hon. Member for Chesham and Amersham (Mrs. Gillan) for her support for the programme motion. I do not want to take issue with any of her comments because I think that we should all like to make progress on consideration of the Bill.
 As regards the comment from the hon. Member for Oxford, West and Abingdon (Dr. Harris), we have had discussions through the usual channels about the Committee's ability to make progress on part 1 and on the need to have extra sittings on a Wednesday. It would be preferable if we did not have to sit on an additional Wednesday; I am sure that Committee members would agree with that. The hon. Member for Chesham and Amersham made a fair point about members' having other commitments. She will know from experience that that also applies to Ministers. 
 We propose extra sittings for the week after the recess simply to ensure that there is no further encroachment on the time devoted to consideration of other parts of the Bill. I welcome the enthusiasm of the hon. Member for Oxford, West and Abingdon for even more Wednesday sittings. I do not think that there would be much support for that proposal from either side of the Committee. My responsibility is to ensure that the Committee has had the chance to consider the Bill properly, so we would not rule out the possibility of further sittings on Wednesdays, if the need arises.

Evan Harris: The Minister has misunderstood me. My enthusiasm is for at least six sittings on part 2 of the Bill, which deals with standards. As I understand it, the Government are not willing to push for further meetings after 19 June. Given that the recess will be over by then, the only option is to have additional Wednesday sittings. I simply wanted the Minister's assurance that the six sittings originally proposed and agreed for part 2 will be restored, even if that means sitting on a further Wednesday—unless, of course, we finish with part 2 in four sittings.

John Hutton: The programme motion will ensure that we have six sittings on the CHAI clauses. I am sure that everyone eagerly awaits the contribution of the hon. Member for Sutton and Cheam (Mr. Burstow) on those issues. The hon. Member for Oxford, West and Abingdon has made a fair point, and I am trying to meet him halfway. However, he is wrong on one point; the problem is not my reluctance to meet after 19 June. I have no flexibility on that matter, because the House has decided that the Committee must conclude its sittings by that date, and I am simply its humble servant.
 Question put and agreed to.

Peter Atkinson: I remind Committee members that, in our strange world, Tuesday 3 June is treated as a Monday, and that the Committee will sit at 10.30 am and 4.30 pm.

Clause 7 - Effect of authorisation

Question proposed, That the clause stand part of the Bill.

Simon Burns: I want to raise a brief technical point with the Minister because, as he will be aware, clause 7 gives authorisation to the bodies corporate, which are NHS trusts. Its subsections describe the legal authorisation for foundation trusts. If the need arose, is there a mechanism in the Bill, or in legislation generally—I suspect that it would need to be in the Bill—to reverse that process? Such a provision would be required in exceptional circumstances only, but there might conceivably be the odd instance when, for a variety of reasons, a foundation trust might no longer wish to continue as a foundation trust after a time or might become incapable of providing the services and health care that are required for it to remain as a foundation trust. The trust may, therefore, wish to revert to NHS trust status.
 My understanding is that that process is irreversible—there is no reversal mechanism. Will the Minister confirm that and state whether it is wise not to provide such a mechanism for the few and, I suspect, exceptional circumstances in which a foundation trust would wish to revert to its former status?

Andrew Lansley: Before the Minister responds, it seems perfectly clear in clause 7 that all of the obligations and rights of an NHS trust or a public benefit corporation are continued after the point of authorisation, and that is fine. However, I do not understand—perhaps the Minister will enlighten me—what happens if, before the point of authorisation, the NHS trust or public benefit corporation has taken on contractual obligations that are inconsistent with the terms of its authorisation? What happens subsequently with such rights or obligations?

John Hutton: I will deal quickly with the point made by the hon. Member for West Chelmsford (Mr. Burns). Later parts of part 1, especially clauses 23 to 26, provide for the dissolution of NHS foundation trusts. It is not, therefore, a once-and-for-all process. We have envisaged circumstances in which it might be right to dissolve the NHS trusts, and clause 25 in particular sets out the procedures for doing that.
 The hon. Member for South Cambridgeshire (Mr. Lansley) asked a characteristically intriguing question. I will need to take proper legal advice on that point. Therefore, because I do not want to detain the Committee unnecessarily, I shall write to the hon. Gentleman and copy my response to other members of the Committee. In general terms, the hon. Gentleman is right. The architecture that is proposed in clause 7 assumes the organisations' seamless transfer from NHS trust to NHS foundation trust status—there is no need for the dissolution of the NHS trusts, and there is no need for a transfer under the Transfer of Undertakings (Protection of Employment) Regulations 1981 because there is no transfer of an entity. It is a seamless process. 
 We have also extended that principle to the contractual liabilities of the trusts as they exist at the moment of authorisation. It is conceivable that the issue that the hon. Member for South Cambridgeshire highlighted could arise in, for example, the treatment of private patients. Providing such treatment would take applicants for NHS foundation trust status above the private cap below which they must operate under the provisions of clause 15. In those circumstances, the clause 15 cap would have to take precedence. 
 The hon. Gentleman raised a genuinely serious point, and I am happy to take further advice from legal sources in the Department and across Government, after which I shall write to the hon. Gentleman with a properly thought-out answer. 
 Question put and agreed to. 
 Clause 7 ordered to stand part of the Bill.

Clause 8 - Amendments of Constitution

Simon Burns: I beg to move amendment No. 267, in
clause 8, page 4, line 15, at end insert 
 'subject to the endorsement of those changes by a vote of the trust's members at which at least 50 per cent. of eligible members cast their ballots.'.
 The clause deals with amendments to constitutional foundation trusts once they are up and running, and, as the Bill is currently drafted: 
''An NHS foundation trust may make amendments of its constitution with the approval of the regulator.''
 The purpose of this amendment, which is in many ways a probing amendment, is to find out the exact purpose of this clause. We want more information, and possibly, in some instances, some comforting words from the Minister. We want to ensure that changes to a constitution can be made only with the approval of the regulator, and subject to the endorsement of those changes by a vote of the trust's members at which at least 50 per cent. of eligible members cast their ballots. That is being suggested to ensure that the members will approve any changes. 
 The Bill is currently unclear as to how many people would be needed to propose changes to a constitution. Can anyone seek to make changes, and can non-constituents also make changes? I ask those questions—here I refer back to earlier debates on the Bill—because of the possibility, in certain circumstances, of a particular organisation, pressure group or group of constituents having very fixed views on aspects of health care. Might they have the potential to hijack the direction of a foundation trust by changing the constitution to have it dovetail with particular and possibly narrow views? 
 We are seeking to include in the Bill as broadly based a formula as possible to ensure that changes to a constitution must involve a significant number of board members. That would prevent the hijack of trusts by special interest groups, which everyone on the Committee will agree would be a very unsatisfactory and dangerous situation.

Jon Owen Jones: I take the hon. Gentleman's point that this is a probing amendment, but surely the regulator is the safeguard necessary to ensure that a trust could not be hijacked. As the Bill proposes, amendments must, through the constitution, have the approval of the regulator. That is the safeguard. The Tory amendment seeks the safeguard of a 50 per cent. ballot. Unfortunately, in today's world, a 50 per cent. threshold can be a severe obstacle to change. The Tory party cannot seriously wish to constrain the ability and the flexibility of foundation trusts to make changes by imposing such a difficult hurdle.

Hazel Blears: We covered a great deal of this ground in previous debates about the relationships between the minimum frameworks set out in schedule 1 and the rights of local organisations to come up with a constitution that is robust, vigorous and fully representative of the community. I should like to reinforce our commitment to ensuring that such constitutions are properly set out.
 Clause 8 rightly provides for NHS foundation trusts to change their constitutions. My hon. Friend the Member for Cardiff, Central (Mr. Jones) has talked about the need for flexibility; the geographical areas to which foundation trusts provide their services may well change, so trusts would need to be able to vary the boundaries of their public constituencies. Also, new services may be taken on, in which case the partner organisations that are to be appointed under paragraph 12(2) of schedule 1 may need to vary or take on more PCT representatives, if they provide services in a different geographical area. In other words, we can certainly contemplate circumstances in which the constitutions might need to change. 
 Before any application is approved by the Secretary of State and by the independent regulator, we expect provision to be made for possible changes in the constitution, and related powers of the various constituent parts of the NHS foundation trust to be defined. 
 The hon. Member for West Chelmsford (Mr. Burns) raised an important point about the need to get the checks and balances right in this new form of democratic public benefit corporation, so that we know who has the power to introduce changes and how those changes can be endorsed. At this stage, we do not want to prescribe numbers in the Bill, or to be inflexible about how that change might come about. However, I am happy to record that we want the constitutions to contain robust provision for flexibility when circumstances change and to ensure, as the hon. Member for West Chelmsford said, that no special interest group can move changes to the constitution for its own sake.

Simon Burns: I am grateful to the Under-Secretary for her comments. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Simon Burns: I beg to move amendment No. 269, in
clause 8, page 4, line 16, leave out subsection (2).

Peter Atkinson: With this it will be convenient to discuss the following:
 Amendment No. 270, in 
clause 10, page 4, line 32, leave out 'registrar of companies' and insert 'regulator'.
 Amendment No. 271, in 
clause 10, page 5, line 6, leave out subsection (4).
 Amendment No. 272, in 
clause 10, page 5, line 9, leave out 'registrar of companies' and insert 'regulator'.

Simon Burns: The amendment would remove clause 8(2) from the Bill, and specifies that all foundation trusts must send a copy of their constitution, with any amendments, to the registrar of companies. Why do the Government constantly refer to the registrar of companies for organisations that they seek to create in this Bill? They are not commercial companies but a public service with a changed format for the provision of that service. Why is it necessary to send the constitution to the registrar of companies, especially as foundation trusts are to be known as ''public benefit corporations'', rather than as ''companies''? Ministers have been emphatic in drawing the distinction and in making it plain that they do not see the trusts, in any shape or form, as companies.
 Amendment No. 270 specifies that the constitution of foundation trusts should be sent, and consequently held, by the independent regulator rather than by the registrar of companies. Logically, in the context of what the Government seek to do and the definition and purpose of foundation trusts, that is a superior and more relevant way to proceed than to deal with the registrar of companies. 
 Members will appreciate that the other amendments are consequential; however, the explanatory notes—particularly with regard to amendment No. 271—would provide a worthwhile subsection were the previous amendments not to be passed. The explanatory notes specify that the register must be available for public access and require the registrar of companies to keep originals of documents on that register for 10 years, or for two years from the dissolution of an NHS foundation trust, so that they are available for inspection by people or bodies for whatever reason. I hope that Ministers find that both relevant and appealing.

John Hutton: Again, the hon. Gentleman has made a meal of that. Requiring the registrar of companies to keep details of NHS foundation trusts does not transform them to the status of companies in a way that would be understood under English company law.
 The hon. Gentleman asked a fair and reasonable question; should information about foundation trusts be available through the registrar of companies or the independent regulator? There is common ground between us, and access to such information must be available at some point in the system. 
 Let me correct him on one of his opening remarks. 
 Perhaps it was shorthand for another point, but he said that the registrar of companies kept details about commercial organisations, and asked—as foundation trusts are not commercial organisations in that sense—why the registrar of companies should hold their particulars. That is not true, as I am sure he will concede after giving it a moment's thought. The registrar of companies also keeps details of not-for-profit organisations; there is no inconsistency on that point.

Simon Burns: The Minister is correct. I was using shorthand, which, on reflection, was probably a mistake. I used it because—as I hinted later on—there is great sensitivity about the idea of ''companies''; particularly on his side of the Committee and the House. The Secretary of State's speech early last year gave rise to confusion about companies. I used shorthand so as not to reopen that aspect of the debate with the amendment.

John Hutton: I am very grateful to the hon. Gentleman for not wanting to reopen that issue. However, this is a question that does not come down to principle but to common sense. What is the easiest way to facilitate the widest possible access to the relevant information? The choice is between the regulator and the registrar of companies. We opted for the registrar of companies for a variety of reasons. Most importantly, the registrar of companies is where most people look for information about organisations.
 Some NHS foundations trusts, just like NHS trusts, will be free to enter into joint ventures with other providers and to set up companies themselves. If one wanted information about those organisations, one would not go to the regulator but to the registrar of companies. Rather than have people pursue information around the system, which is essentially what the amendment would require, we chose the option of having them go to just one point. The registrar of companies will hold the relevant details regardless of whether companies are set up by NHS trusts or NHS foundation trusts. It was simply a pragmatic decision, Mr. Atkinson, to keep all the information in one place. It is certainly not a back-door route into the argument to which the hon. Member alluded about whether foundation trusts are companies or not.

Gary Streeter: I accept that this is not some sort of back-door admission that the NHS foundation trusts will be companies. We have dealt with that issue. However, does the Minister agree that the registrar of companies keeps a record of companies that are limited by shares or by guarantee as well as of not-for-profit organisations but does not keep records of charitable trusts' trustees or partnership agreements? Has the Minister made the right pragmatic choice? Most people who want to find out more about these public benefit corporations, knowing that there is a regulator, might think that the regulator would be the first port of call to find out how to obtain copies of their constitutions. Perhaps the Minister would think about this matter again.

John Hutton: I am always happy to think again when serious points have been made, and I am happy to
 think about that one. The hon. Member's point about charitable trusts and partnership arrangements is accurate; the registrar of companies does not retain such information. However, I do not understand the point of that observation; that does not impact upon the basic issue that we must resolve, which is where to seek information about an NHS foundation trust. Finding information about a charitable trust is a separate issue. As my hon. Friend the Under-Secretary has just reminded me, the NHS foundation trust will keep all the information as well, so there will be local access to it too.
 This is not a huge issue; it is largely a debating point. The simple question that we had to resolve in the Bill was whether or not there should be one main portal of access to the information.

Andrew Lansley: The Minister did not use the argument that I expected, which was that it is possible for an organisation to be a public benefit corporation and not an NHS foundation trust, if only in so far as that corporation has been established to pursue an application to become an NHS foundation trust. In that case, it would be inappropriate for the regulator to keep the details of a public benefit corporation to which he has not given authorisation. I wonder, therefore, whether I am wrong.

John Hutton: I am grateful to the hon. Gentleman for making that helpful contribution. I will ask my officials why that was not in my notes, because it is a very effective point.
 The hon. Gentleman and Committee members will know that that is an interim stage. I do not want a lengthy period between the establishment of the public benefit corporation and the authorisation for that corporation to act as an NHS foundation trust. There will be some time between the two, but that should not necessarily be lengthy. However, the hon. Gentleman is right; it would be inappropriate in those circumstances for the regulator to keep such details. 
 As usual, I have spoken for longer than I intended. The hon. Gentleman made a fair point and his hon. Friend the Member for South-West Devon asked me to have another look at it, and I will. However, on balance, I think that the right decision has been made.

Simon Burns: In the light of the Minister's assurances, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 8 ordered to stand part of the Bill.

Clause 9 - Variation of authorisation

Simon Burns: I beg to move amendment No. 139, in
clause 9, page 4, line 20, leave out 'is to' and insert 'must'.
 Subsection (2) of clause 9 states: 
''In deciding whether or not to vary an authorisation the regulator is to have regard (among other things) to—''
 the overview and scrutiny committee of local authorities and the Commission for Patient and Public Involvement in Health. Both of those proposals are eminently reasonable. 
 However, I am concerned about the use of the words ''is to''. They are ambiguous, and I should like to toughen up the wording to ''must''. That would make clear that if there were variations of authorisation, the regulator ''must'' have regard to any recommendations that have been made to those two bodies, rather than ''is to'' have regard, which is a weaker and more lax instruction. 
 The use of the word ''must'' would impose an absolute duty, but if ''is to'' were used, some safeguards that one had assumed were implemented might not be—because of the variation of authorisation—particularly with regard to the provision of a trust's core services. One such example is the Royal College of Midwives. I am sure that Ministers are aware of a recent article in The Times concerning the provision of midwifery services throughout the country, and that maternity services are a core function of the NHS. The Under-Secretary of State for Health, the hon. Member for Tottenham (Mr. Lammy) is certainly aware of that, because he is quoted in Hansard of 7 May 2003 as making that point. The figures certainly back that up. Approximately 555,000 babies were delivered in England in the most recent year for which figures are available.

Peter Atkinson: Order. The hon. Gentleman is confusing me on this amendment. How exactly does he think that this is relevant to amendment No. 139?

Simon Burns: I am sorry, Mr. Atkinson. What I was trying to do—inadequately as you rightly pointed out—is to give an example of a service that could be removed by a foundation trust. In my understanding, that would require a variation of authorisation. I suspect that a local authority overview and scrutiny committee would think that the withdrawal of maternity services from a foundation trust would not be in the local community's interest. The scrutiny committee would make its views known to the regulator. As clause 9 is drafted, if the regulator ''is to'' have regard, he can take the committee's views on board but not necessarily agree with them, and thus allow the withdrawal of a maternity service.
 Amendment No. 139 proposes that the regulator ''must'' have regard. The word ''must'' would strengthen the hand of a local authority overview and scrutiny committee to allow it to ensure that such a service would not be removed from local health care provisions in a foundation trust. The example I cited may be common in foundation trusts, and the hand of overview and scrutiny committees must be strengthened to ensure that the regulator would not have this apparent widespread freedom to have regard to the views of the scrutiny committee rather than abiding by them.

George Young: I shall speak in favour of amendment No. 139 because it raises issues that may be more important than my hon. Friend the Member for West Chelmsford realised. This is the first point in part 1 of the Bill at which the involvement of local government and social services is mentioned, and it underlines the need for the regulator
 to have regard to the views of local government. The Government are keen for good co-operation between health services and social services.
 Concern has been expressed to the Select Committee on Health that when the concept of foundation care trusts is being developed, emphasis may be placed on acute services, and the needs of the wider health economy may be disregarded. The King's Fund posed the following question about foundation trusts: 
''Has foundation trust status had any impact on relationships within the local health economy, particularly with respect to collaborative working, predominantly for the care of older or chronically ill patients?''
 We have discovered that social services will not have a place, as of right, on primary care trusts; that is a matter for discretion. However, it is essential that foundation care trusts have regard to the needs of social services. If the route of foundation care trust were taken, there is a risk that loyalty to a popular local institution—namely the district general hospital—would be promoted, and other claims on the health economy disregarded. For example, there may be a focus on the reduction of waiting times for elective treatment—an issue that we all understand—but there may also be other priorities in the local health economy. Unless the regulator or someone else stands back and examines the broader picture, there is a risk that resources will not be applied as they are best needed. 
 If the focal point is the district general hospital, a community hospital that comes under the wing of a foundation trust may be sacrificed for the perceived interests of the DGH. I suspect that many constituencies have both DGHs and outpost hospitals. In my constituency, the DGHs are in Winchester and Basingstoke, but there is also a community hospital in Andover.

Andy Burnham: That is precisely the point. The new structures proposed by the Bill would help to represent the interests of outlying hospitals more than they are in existing NHS structures. Larger institutions have sometimes disregarded the interests of smaller hospitals.

Peter Atkinson: Order. Before the right hon. Gentleman continues, I should say that we are probably moving away from the amendment to having a stand part debate. I am happy to have a ''stand part debate'' now, providing that other hon. Members do not seek a stand part debate at the end of this debate.

George Young: That is a most helpful suggestion, Mr. Atkinson. This is not the right point at which to debate the relationship between social services and foundation trusts. If your ruling is that we can have a stand part debate, I shall not say another word.

Peter Atkinson: Order. The right hon. Gentleman may continue. However, I hope that other Committee members will not rise to speak when I put the question that the clause stand part of the Bill. We would then
 have a stand part debate all over again. If the Committee wants to consider this a stand part debate, we shall have one now.

George Young: The signal has turned from amber to green. I am much obliged.
 If, for the sake of argument, a foundation trust generates a surplus, which is one of its objectives, the needs of community-based care should not be set to one side and certainly should not be focused on the narrow needs of the district general hospital. 
 As social services would not be part of foundation trusts as of right, the only way in which they could be made part of them would be through the intermediation of the regulator. I am not sure that that is the best way in which to proceed. Perhaps the Minister will explain how the new concept in the NHS will not undo the good work done in breaking down the Berlin wall between health services and social services. The NHS has promoted closer relationships between primary care trusts and social services and has introduced joint budgeting and bed-blocking initiatives. I hope that the initiative will not undo that good work. 
 I am the custodian of the Select Committee on Health, although I am not a member of it. I will therefore conclude by reading from its report: 
''The policy of Foundation Trusts does not necessarily mean that partnership between acute and community settings will be damaged, but we believe it does introduce the need for stronger safeguards to ensure continued co-operation between PCTs, Local Authorities, and other NHS organisations across the board, and a continuing emphasis on whole systems working.''
 That is the assurance that I seek from the Minister.

Evan Harris: I support the points made by the right hon. Member for North-West Hampshire (Sir George Young) and thank him for his support for the theme that was raised earlier in the consideration of the Bill. This is indeed the first time that the words ''overview and scrutiny committees'' appear in the Bill. Of course, questions have been asked before about the danger of over-concentrating on the acute sector, on secondary care rather than on primary care and on the health side of health and social care rather than on social care itself.
 We would support the amendment if it were to make the clause stronger, because the bodies listed—specifically the overview and scrutiny committees and the Commission for Patient and Public Involvement in Health, which are, presumably, informed by the views of patient forums, and particularly PCT patient forums, through their reports to the commission—must be taken into account. In that respect, the debate is similar to that on clause 6, during which I asked whether, in considering an authorisation rather than simply a variation of authorisation, the regulator must have regard to the views of local people. 
 The amendment lists a series of local bodies. The Minister said that the list was too long and would provide an individual veto to too many groups. It would be worrying if the Government could not reassure the Committee that authorisation could not be prevented in some circumstances, either by opposition to the proposed variation of authorisation 
 from an overview and scrutiny committee or through a properly formulated report to the regulator from the Commission for Patient and Public Involvement in Health. 
 If the Minister says that ''is to'' is sufficiently strong to ensure that there will not be a variation of authorisation if it is strongly opposed by those bodies, I ask again why that applies only to a variation of authorisation and not to the authorisation itself. 
 The Minister argued previously that paragraphs 7.10 and 7.11 of ''A Guide to NHS Foundation Trusts'' ensure that local bodies are consulted and that their opinions on authorisation must be taken into account. However, I should have thought that a variation to the authorisation is equivalent to the authorisation. As the Government have seen fit to ensure that there is a specific mention in primary legislation of the overview and scrutiny committee's opinion and the Commission for Patient and Public Involvement in Health in clause 9, I should be grateful if the Minister would explain why, at the very least, that was not required in clause 6. 
 I hope that the Minister will consider accepting the amendment. It will reassure those of us who understand the reasons given by the right hon. Member for North-West Hampshire why there is a danger of the entire health care system being led by the secondary care system. In planning a holistic health and social care system, hospitals' services especially should follow what is required by primary care and, indeed, the social care sector.

Andrew Murrison: I support amendment No. 139. I am not sure that my hon. Friend the Member for West Chelmsford quite appreciated the hornets' nest that he would be stirring up in moving the amendment, but that has happened, and we are having a fruitful debate on it.
 I, too, am concerned with the apparent preoccupation with acute care, which appears to be the main thrust of the Bill. I am also rather surprised by it, as I have said to Ministers before. Hitherto, they have shown a commendable interest in primary care. They were, in fact, steering our health service in the correct direction in so far as they were emphasising less the acute side of the service, which has certainly received most emphasis since 1948, and focusing more on social care and primary care. 
 I am somewhat surprised, frankly, that we have the Bill, and I am also surprised by its tone. The amendment proposed by my hon. Friend the Member for West Chelmsford would be a very small and incremental step in the right direction. There is little doubt that we focus heavily on the glamorous side of health care, especially hospitals. We tend to be less interested in community hospitals than the acute sector, despite the fact that the former probably add more to the sum total of human happiness, in many respects, than the latter. 
 I was very interested in the Community Care (Delayed Discharges etc.) Act 2003, which appeared to fracture the relationship between social services and the acute sector. I have a particular interest because, 
 some months before that, my ten-minute Bill appeared to suggest, in a probing manner, that fining might be a good idea in order to establish a more workable relationship between social services and the acute sector. The Government appeared to take that forward with a vengeance, and there is little doubt that there has been a strained relationship, or that a somewhat strained relationship is developing, between local government and the acute sector partly as a result of that. The amendment proposed by my hon. Friend the Member for West Chelmsford will go some small way to re-establishing the proper relationship that should exist between those two sectors. In truth, social services and the acute sector are one and the same thing as regards health care for our constituents. I commend my hon. Friend for suggesting this small, but significant, adjustment to the Bill. I am sure that it will be extremely fruitful, and I hope that the Committee will be minded to accept it.

Gary Streeter: I also commend my hon. Friend the Member for West Chelmsford for having spotted that important point. I support the amendment because I am increasingly concerned about the lack of co-operation and integration in different parts of the country—including the west country—between social services and acute hospitals.
 This is an opportunity for us to make it clear in the Bill that we want the new foundation trusts to work closely with social services committees and to listen carefully to reports made to them, the regulator or the general public by any overview and scrutiny committees pursuant to the Local Government Act 2000. That is particularly relevant and important to elderly people, where there is often a gap between the care offered and the kind of co-operation and integration that should take place, largely because funding comes from different budgets—from different jam jars. 
 That situation may even get worse if foundation trusts are set up that are answerable to a new electorate, rather than to the electorate that puts in place a social services committee or an overview and scrutiny committee on a local authority. 
 I support the hon. Member for Oxford, West and Abingdon. This amendment would strengthen the provisions set out in clause 9 and ensure that the regulator must have regard to any report made by an overview and scrutiny committee. The best place for that injunction is not in clause 9, which deals with the variation of authorisation—I imagine that that would be a relatively infrequent activity—but in clause 6, because the initial authorisation is surely the most important document that will be published, certainly in the first few years of any new foundation trust. The regulator should have regard, at that stage, to any reports by an overview and scrutiny committee. I hope that the Government will think again. 
 It surprised me that subsection (2)(a) should appear so expressly in clause 9 but is not referred to at all in the previous clauses on the granting of initial authorisation. That is probably an oversight; these things can happen when drafting detailed, long and 
 complicated measures, and I hope that the Government will reconsider it. 
 It is important that, where possible, the Bill should send a signal from the centre to acute hospitals, foundation trusts, social services committees and local government that they should work together in a more integrated and co-ordinated way. This is an opportunity to make that very clear, and I hope that the Government will listen.

Jon Owen Jones: I challenge the emerging consensus that there is an over-emphasis on acute care in this country. Often those arguments are advanced more strongly by people who have direct practice in primary care or social work, and those people are well represented in Parliament and on this Committee. This is not an argument against integration, but if it is true that there is an over-emphasis on acute care and hospital provision, why is it also true that there is clearly an undercapacity for acute care, and that a huge number of our constituents are waiting for acute care? The overwhelming majority of people who come to my surgery—and, I believe, other MPs' surgeries—with complaints about health care cannot access care in hospitals.

Gary Streeter: The hon. Gentleman makes an important point. However, constituents come to us and talk about the length of time that it can take to see a GP—it can take three or four days to secure a routine appointment—and to get sufficient help for elderly people in need of support from social services committees. There are issues about access to treatment across the board.

Peter Atkinson: Order. Under my liberal regime we are having a wide-ranging debate, but the hon. Gentleman is going extremely wide of the clause. I should be grateful if he would bear that in mind.

Jon Owen Jones: I accept your strictures, Mr. Atkinson, and I wish to see the Bill progress. However, hon. Members should understand that the view that acute care in this country receives too much attention is often propounded, but people should look at the evidence available before accepting it.

Andrew Lansley: I rise to speak to the clause, which I will not have a chance to do unless I speak to the amendment.
 I join other hon. Members in believing that the hon. Member for Oxford, West and Abingdon makes a good point on the issues raised thus far. If there were to be a substantial change of services, consequent to an original authorisation, the Committee would need the assurance that the provisions in the Health and Social Care Act 2001 that relate to overview and scrutiny committees would be engaged in that process, even though they are not separately specified in the legislation. 
 I have concerns about the relationship with local government, and that is relevant to the point made by my right hon. Friend the Member for North-West Hampshire. When I tabled amendment No. 187, I did not recognise—because I had not then read that part 
 of the Bill—that paragraphs 106 and 107 to schedule 4 provide for the extension of the requirements for co-operation between NHS bodies and local authorities to include NHS foundation trusts. That statutory provision, contained in the Health Act 1999, will apply. 
 My right hon. Friend referred to the Select Committee's conclusions on local authorities and primary care trusts, and the arrangements between PCTs and foundation trusts. Those conclusions arose, in part, from evidence given to the Select Committee by Karen Bell, who is the chief executive of Huntingdonshire PCT. She is, quite reasonably, concerned that, although Huntingdonshire may not be the leading PCT for Addenbrooke's hospital—indeed, 97 per cent. of Hinchingbrooke hospital's purchasing is by Huntingdonshire PCT—there is still a substantial amount of purchasing at Addenbrooke's by Huntingdonshire PCT. The PCT is concerned that, as part of its responsibility for commissioning, it needs to have some representation. 
 I will not re-enter the debate that the Committee had on the representation of PCTs on foundation trust boards, but PCTs must have that link, otherwise they cannot properly fulfil their responsibilities. 
 We had a debate on Tuesday about the extent of consultation on the variation of authorisation. The Minister rightly said that the regulator must act reasonably and proportionately. That means that written representations can be made by the trust at any time. However, it is unclear whether the regulator may make a variation in an authorisation in circumstances in which the NHS foundation trust had not sought it. On the face of it, it seems that a variation in an authorisation should, in normal circumstances, be at the request of an NHS foundation trust, but that may not always be the case. 
 To the extent that the request is not always made by the trust, it may be made at the behest of the Secretary of State. That brings us back to the interpretation of the general duty of the regulator. If the regulator interprets his general duty differently on what the provision of a comprehensive health service requires, he might impose a variation in authorisations. Does the Minister therefore agree that there might be an imposed variation?

John Hutton: That was an interesting and wide-ranging debate, and it raised some important issues. We have already debated some of those issues, and I shall return to the wider themes that have been raised.
 I shall, however, first speak to the amendment, because we have rather lost sight of what the hon. Member for West Chelmsford proposed to the Committee. Clause 9 (2) states: 
''In deciding whether or not to vary an authorisation the regulator is to have regard (among other things) to''
 any report made to him by the overview and scrutiny committees and by the Commission for Patient and Public Involvement in Health. 
 The amendment would replace the words ''is to'' with the word ''must''. Instead of saying that the regulator ''is to have regard'', it will say he ''must have 
 regard''. I do not want to get into party politics, but I ask everyone here what the difference is between saying that he ''is to have regard'' and that he ''must have regard''. If anyone can find a difference, I would be very interested to hear what it is.

Simon Burns: Accept the amendment, then.

John Hutton: There is no need to accept the amendment. The Bill as drafted requires the regulator to have regard to those two entities. With the greatest of respect to the hon. Member for West Chelmsford, there is nothing of substance in the amendment that he has raised. He did not refer to the difference between ''is to'' and ''must'' in his remarks at all—and rightly so, because there is no distinction.
 The hon. Gentleman's desire for the regulator to ''have regard'' is already provided for in the Bill. He confused himself over a different point. He thought that his amendment would require the regulator to accept the views of the oversight and scrutiny committee. [Interruption.] He says no, but that is the case. In moving the amendment, he said that the regulator must abide by the oversight and scrutiny committee's reports. His amendment required the regulator to abide by that committee's decision. That is a complete misunderstanding of the role and responsibility of the oversight and scrutiny committee. The context is a situation in which a significant change in service is being proposed. The regulator would have to adjudicate and decide whether there should be a variation in the licence in that situation.

George Young: The Minister has avowed the argument that there is no difference between ''is to'' and ''must''. Why then, later in the same clause, does it say, ''The regulator must''? Is there any difference there?

John Hutton: There is not. [Interruption]. This is a very fine debating point. With great respect to the right hon. Gentleman, does it alter anything of substance in the clause? The answer is no, it does not.

Simon Burns: Given that subsection (3) uses the word ''must'', and given that the whole purpose of the amendment—among other things—is to remove any ambiguity, why do the Government not accept the amendment so that there will be consistency and no ambiguity?

John Hutton: Ambiguity could arise only if, for example, there were some judicial or legal challenge, and the advice that I have received from the Government's lawyers is that there is no difference between ''is to'' and ''must''. There is simply no ambiguity.

Jon Owen Jones: This is a very interesting debate on definitions. I recall the former President of the United States arguing that the definition of ''is'' could be construed in different ways. Perhaps the Minister may like to reflect and reread what President Clinton said. That may help with the case being put forward by Conservative Members.

John Hutton: I hold the former President—

Simon Burns: Will the Minister give way?

John Hutton: I shall when I have dealt with my hon. Friend's point. I hold former President Clinton in the highest regard. He was a brilliant President. However, his competence and jurisdiction are limited. His pronouncements about the words ''is'' and ''must'' are unlikely to carry any weight in the courts of England, perhaps for perfectly understandable reasons.

Gary Streeter: The Minister will, of course, be aware that famous court cases in this country have gone as far as the House of Lords on the interpretation of ''the'', ''a'' or ''an'' in a statute. Picking up on my right hon. Friend's point, I note that clause 9(1) uses the words, ''The regulator may'', subsection (3) says ''The regulator must'', and subsection (2) uses the words ''the regulator is to''. Can the Minister not understand that in years to come, lawyers may engage in protracted and expensive cases, trying to work out whether a difference was intended in the use of those words? For the purpose of clarity, it would be worth having the word ''must'' in subsection (2), as is in subsection (3).

John Hutton: No. I repeat that there is no difference, in the legal sense, between ''is to'' and ''must''. If the hon. Gentleman is suggesting that lawyers will engage in expensive litigation to try to establish such a difference, of course I cannot rule that out, but it would be a complete and scandalous waste of money.
 The hon. Gentleman's other point—that the introduction of ''may'' in subsection (1) casts some shadow over the words used in subsections (2) and (3)—is complete cobblers. It casts no doubt at all. The hon. Gentleman said that the three different words ''may'', ''is'' and ''must'' would add to the confusion over the meaning of clause 9. That—and this is a purely legal term—is cobblers. I doubt that there is extensive jurisprudence about that particular phrase, but everyone knows where I am coming from. 
 I shall now deal with the point made by hon. Member for West Chelmsford. The word ''may'' was deliberately chosen in clause 9(1) because we want to allow the regulator to have discretion whether to authorise a change in the terms of the licence. It is right that he should have such discretion, which is why we chose the word ''may''. In subsection 9(2), however, the regulator ''is to'' have regard to those two reports and must send a copy of any variation of the authorisation to the registrar of companies. We can dig over the bones of the subtlety between ''is to'' and ''must'' if the Committee really wants. However, I do not want to because it is not a substantive point.

Simon Burns: It is.

John Hutton: The hon. Gentleman said, ''It is,'' and we all know that that means he will request a vote. We all looked forward to it—although that is perhaps a slight exaggeration. We all enjoyed the debate about the inevitable amendment about converting ''may'' to ''shall''. Now there is the inevitable amendment about converting ''is to'' to ''must''.

Jim Dowd: Making so much of changing ''is to'' to ''must'' is utterly fatuous, given
 that the Committee has nothing to say—there is certainly no amendment on the amendment paper to that effect—about something as vague as ''among other things'', which appears a little further on.

John Hutton: Yes, indeed. My hon. Friend has helped me out of a hole that I was digging for myself, and I am grateful to him for that. As my hon. Friend said, the hon. Member for West Chelmsford has not achieved the clarity that he wanted.
 Let us move on to what, by common consent, is a more substantive issue—although my reading of the amendment and clause leads me to believe that Opposition Members have confused two separate things. Clause 9 deals with varying the terms of the authorisation should a significant service change be proposed. With great respect to Opposition Members, it is not about the wider issue of the relationship between secondary care, social care and other local government services. I absolutely agree that that co-operation is fundamental. To be fair to Opposition Members, they have repeatedly made the case that the Government have tried, not just through legislation, but through policy, resources and other action, to bring down the Berlin wall to which the right hon. Member for North-West Hampshire referred. 
 Although progress is being made, there is also confusion. The Bill concerns secondary care, but is not about prioritising those needs. The Government want to reform the structure and operation of the secondary care sector. The Bill is designed to do that, but not at the expense of other areas of health and social care. I take on board the comments from Opposition Members and from my hon. Friend the Member for Cardiff, Central. We all share a common interest—irrespective of party—in ensuring closer co-operation, because our constituents ultimately benefit if there is a seamless service between health and housing. Our common interest is to pursue that agenda. In proposing this legislation on hospitals, the Government have not sacrificed that agenda. 
 The hon. Member for South Cambridgeshire, who increasingly seems to be doing a better job than I am in defending the Government's case—perhaps he would like to come over here and help me out more formally with that—was right to draw attention to other parts of the Bill where co-operation between NHS foundation trusts and social care providers is built into the fabric of the legislation. The hon. Gentleman was right to refer to paragraphs 107 and 106 of schedule 4; he could also have referred to paragraph 23. I acknowledge that we have not yet reached schedule 4, but I look forward to that. 
 In several parts of the Bill, the Government have carried over the duty of co-operation and powers of flexibility in section 31 of the Health Act 1999 into the ambit of NHS foundation trusts. Therefore, all those advantages have been carried over into the Bill, and it cannot be fairly argued that because we have introduced legislation that deals with secondary care, we have forgotten the other areas of health and social care. With great respect, that is complete nonsense. 
 The Bill makes provision to ensure that under the Health Act 1999, NHS foundation trusts have the same legal obligations and legal powers as other parts of the NHS. We have included in the Bill the tools that NHS foundation trusts will need, and the legal duties that will need to bear on those, to do what the hon. Gentleman, other Conservative and Liberal Democrat members, and my hon. Friends, have asked. 
 To be fair, there is no substance in the argument that the amendment is necessary to require NHS foundation trusts to co-operate with social care providers in providing seamless care. That is expressly dealt with in other parts of the Bill. 
 Clause 9 provides for the much narrower issue of varying the terms of NHS foundation trusts' authorisation. The Bill is clear in that regard. The regulator is to have regard to the views of the oversight and scrutiny committee, not abide by them, as the hon. Member for West Chelmsford said. For the sake of completing the historical tour, may I ask who gave local authorities that competence and role in health care planning and strategic development? Was it the Conservative Party? [Hon. Members: ''No.''] Was it the Government? [Hon. Members: ''Yes.''] Thank you very much. The loyalists respond, even the rabble. A little bit of pantomime never does anyone any harm. 
 The Committee has taken a long time on this matter. I agree with the points made by Opposition Members and by my hon. Friend: We must ensure that there is proper co-operation between NHS foundation trusts and health and social care providers, and the Bill provides that. Amendment No. 139 has absolutely nothing to do with the issue. We must see all the issues in context. There is substantive policy, and we have addressed it. Amendment No. 139 is a million miles from the issue. 
 The hon. Member for South-West Devon raised a good point when he voiced his concern that something similar should be in clause 6—but it is. There is a duty to consult, and clause 6 is clear about how to make regulations for primary consultation. There will be consultation with local authorities on the establishment of NHS foundation trusts. My right hon. Friend the Secretary of State will ensure that the regulations extend to that.

Evan Harris: The Minister ought to recognise that that point was well made by the hon. Members for South-West Devon and for South Cambridgeshire, as well as by me. The issue is not consultation because, as the Minister said, that is provided for in clause 6 and in the guide. However, why does clause 6 not include the need to have regard to the views of the overview and scrutiny committee on authorisation? It is good that clause 9 states that the regulator must have regard for primary legislation—I understand what the Minister said about not giving a veto and not being required to abide by any views—but the fact that the regulator should have regard to the views of the overview and scrutiny committee should be included in clause 6.

John Hutton: The hon. Gentleman could have tabled an amendment to clause 6, but he did not. He cannot
 do that now, because clause 6 has already been debated.

Evan Harris: I refer the Minister to the Committee's debate on 20 May, when an amendment, tabled in my name, to clause 6 was discussed. Amendment No. 246 said that the application should be
''endorsed by the relevant local authorities, primary care trusts, patients' forums and representatives from local staff side organisations;''.
 In introducing that amendment, I made the point that the overview and scrutiny committee was the appropriate place for that to happen. The Minister said that that would represent a veto. Is it possible to compromise and use the language of clause 9 in clause 6?

John Hutton: We can return to that issue on Report or later in the Committee. I have not yet read the hon. Gentleman's speeches in Hansard, but I will do that over the weekend. Clearly I need to get out more.
 The hon. Member for South Cambridgeshire asked whether the independent regulator could vary the terms of authorisation if a foundation trust did not want that to happen. The answer is yes, if it is necessary to do so. The obvious circumstance in which it could happen is that of failure of the foundation trust as set out in clause 23—and rightly so. The regulator should have the ultimate jurisdiction, and the Bill provides for that. It should be a rare occurrence: we do not expect the regulator to have to vary the terms of authorisation regularly, as it would imply that something was fundamentally wrong with the operation of an NHS foundation trust. The whole point of starting the process with our best performing hospitals is to avoid such a situation.

Evan Harris: I am keen to spare the Minister the pleasure, or burden, of reading the Committee's debate on clause 6. Why does the Minister feel that it is appropriate to insert in clause 9(2) that to vary authorisation,
''the regulator is to have regard (among other things) to
(a) any report or recommendation made to him by virtue of section 21(2)(f) of the Local Government Act 2002 (c.22) (overview and scrutiny committees),''
 when he does not feel it necessary for the regulator, under clause 6, to have regard to such reports when authorising the original provision of services for an NHS foundation trust? If the Minister can answer that question, we will not need to return to it at a later stage.

John Hutton: It is clear from the way in which clause 6 has been constructed, given the regulator's wider public law duties, that he must have regard to the views expressed during the consultation process, and we intend that that will happen. The hon. Gentleman makes a fair point about the wording of clause 6(4). If it does not achieve our intended purpose, I am prepared to look at it again. I shall not exclude that possibility.
 The independent regulator is not beyond the normal principles of administrative law. If, in the process of consultation, he disregards all the views expressed, the argument could be made that he has not considered those views properly, as he is required to do 
 as part of his statutory and wider public law duties. The hon. Gentleman's point is simply about the technical wording of the clause and not the substantive issue of principle. I agree with the hon. Gentleman that the Standing Committee is the stage at which we consider the technical wording of the Bill, and we are prepared to have another look at that. However, there is no substantial difference between his point of view, my point of view and the Bill. The wording is different; that is how it has been drafted by parliamentary counsel, but I am satisfied that the Bill delivers the policy that we have set out consistently in ''A Guide to NHS Foundation Trusts'' and in speeches that my right hon. Friend the Secretary of State for Health and other Ministers, including the Prime Minister, have made about foundation trusts. 
 The amendment adds nothing of substance to the Bill. The hon. Member for West Chelmsford disagrees, and I accept his right to do so, but there is no legal difference between ''is to'' and ''must''. 
 On the wider, more substantive, point, I have tried to explain to the Committee that I agree that we must ensure that NHS foundation trusts work in close collaboration with other social and health care providers. The Bill will do that, and nothing in clause 9, as it is currently worded, will affect that position.

Simon Burns: I have listened carefully to the Minister on the narrow issue of the specifics of amendment No. 139. I still think that clause 9 is inconsistent and gives rise to ambiguity. Subsection (1) contains the word ''may''; subsection (3) contains the word ''must'', and if the Minister's view, that ''is to'' is exactly the same as ''must'', is to be accepted, why, in his response to an intervention from my right hon. Friend the Member for North-West Hampshire, did he say that ambiguity will arise only if there are judicial proceedings? If that is the case, surely it is better to make the change at this point, given that the Minister said that it is a terribly minor matter. It is a sign of strength, not weakness, to accept Opposition amendments.

John Hutton: I am happy to accept Opposition amendments when they add something to the Bill; I will not accept Opposition amendments when they do not add anything to the Bill, and this amendment does not add anything to the Bill.
 I did not say that ambiguity would arise because of judicial challenge. I do not believe that there is any ambiguity. Neither I, nor any Standing Committee, can draft a Bill that will stop lawyers challenging the wording of legislation. However, the wording is crystal clear.

Simon Burns: I understand the Minister's point about possible judicial proceedings: no one knows what will happen. Nevertheless, my bottom line is that there is some ambiguity.
 If inserting the word ''must'' makes no change to the legislation, but would make it consistent, particularly with subsection (3), I do not understand the Government's reluctance to accept the amendment. It is a minor point on a narrow issue, 
 but it could have far-reaching implications, as it would make the Bill consistent. The Minister obviously will not budge, and he correctly anticipated my sedentary intervention earlier. I shall invite my hon. Friends, and others, to join me in pressing the amendment to a Division.

Andrew Lansley: I hope that I shall not impose on the Chairman's generosity in allowing this to be the equivalent of a clause stand part debate, as I shall not talk about the precise wording of the amendment.
 My hon. Friend the Member for West Chelmsford raised an important point in his opening speech. He said that the Royal College of Midwives has concerns about whether a foundation trust that provides maternity services would be free to opt out of that provision, and how that would work. 
 Although we had a wide-ranging debate, the Minister did not pick up on every point, and this useful point should be clarified. I shall set it out as I understand it, and the Minister can tell me whether I am right. 
 I am going to use Addenbrooke's as an example, and I declare an interest in that 11 weeks ago my wife was the beneficiary of the maternity services of that hospital. Therefore I had a vested interest in the provision of maternity services at Addenbrooke's, and I still have a constituency responsibility. If Addenbrooke's were to consider opting out of offering maternity services—no one thinks for a minute that that is possible—it would be a significant change of services, subject to precisely this kind of variation. That would be the subject of scrutiny as provided for by sections 7 to 10 of the Health and Social Care Act 2001. 
 We discussed the regulator's duty to ensure the provision of comprehensive health services, and that provision is in the Bill to assure parties such as the Royal College of Midwives that a foundation trust could not stop providing maternity services. Such services remain part of the general duties that are laid on the regulator and on the Secretary of State under clause 3. In so far as maternity services were needed, they would be provided as part of the continuing comprehensive health service in England.

John Hutton: I am grateful to the hon. Gentleman for giving me a chance to confirm that point. NHS foundation trusts will not be free to withdraw unilaterally from providing NHS maternity services. Those services will be protected services under authorisation, and any change to them would require local consultation. The regulator's approval would also have to be sought.
 In addition, in deciding whether to approve the terms of an authorisation change, the regulator would have to take into account the wording in clause 14(6), which requires him to have regard to the availability of similar services elsewhere in the locality. There is absolutely nothing in the Bill to give a foundation trust the freedom to pull out unilaterally of the provision of essential NHS services of its own volition.

Simon Burns: On reflection, I shall not detain the Committee on this matter any longer, because I would rather that this, and the whole question of local government involvement, were considered at a later stage of the proceedings. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Peter Atkinson: Who would have thought that such a simple amendment could stimulate such debate?
 Clause 9 ordered to stand part of the Bill.

Clause 10 - Register of NHS foundation trusts

Amendment made: No. 147, in 
clause 10, page 4, line 40, leave out 'or 24'.—[Mr. Hutton.]

Adrian Bailey: I beg to move amendment No. 216, in
clause 10, page 4, line 41, at end insert— 
 '(f) a copy of a report on membership recruitment, detailing measures taken to promote actively membership among all qualifying groups, over the preceding 12 months,'.

Peter Atkinson: With this it will be convenient to discuss the amendment No. 217, in
clause 10, page 4, line 41, at end insert— 
 '(g) a copy of a report on measures taken to provide information to members concerning the trust's activities, as determined from time to time by the regulator.'.

Adrian Bailey: These are probing amendments. They seek to explore ministerial thinking on the role that the foundation trusts will have in promoting involvement in the local community. The amendments are based on my experience in the co-operative movement. In my previous employment I dealt with a vast range of co-operative and mutual organisations. Their rules were based on a standard template, but there were amazing variations in the ways in which they were interpreted and in the levels of public involvement that arose from them.
 Some co-operative societies took their membership role seriously and were very active in promoting community participation over a range of activities. By and large, there was a relationship between the success of each society and the level of member involvement. Others allowed their membership involvement to atrophy and, to a certain extent, were run by what I can only describe as self-perpetuating oligarchies. 
 It is obvious that the Government do not want the latter to happen. It would interest me to know exactly how they will obtain the maximum level of participation, which is essential to success. 
 Inner-city areas have their own problems. My constituency, which is probably quite similar to that represented by the Under-Secretary, is characterised by an unusually high percentage of relatively low-income and elderly people, and an unusually low level of car ownership and mobility. These are obvious issues in terms of foundation hospital trust involvement with the local community. This group has a potentially high level of need, but is potentially inaccessible to the various mechanisms that the 
 hospital trusts will need to operate to promote membership involvement. 
 Similarly, 15 per cent. of my constituency comprises ethnic minority communities of varying origin. Many of them are elderly, first-generation immigrants with a lower than usual level of literacy. There are obvious barriers to communication between them and the hospital trust, although their need as a group may well be far higher than that of others in the community. 
 We have already discussed entryism and the running of these trusts by '' the sharp-elbowed middle classes''. 
 The most effective way of countering this is for hospital trusts to have a policy and to develop relationships with genuinely representative groups in the community that will promote membership from as wide a range as possible. I look forward to the Minister telling us what exactly will be expected of trusts in those areas. 
 Amendment No. 217 also draws on my experience in the co-operative movement, and on my personal experience. The hon. Member for Westbury (Dr. Murrison) spoke about district hospitals being at the glamorous end of the service. I am sure that the professionals involved believe that to be true; however, for a humble layperson such as I, hospitals can be quite frightening. I must confess that I have always regarded them as a rather uncomfortable reminder of my own mortality and have tried whenever possible to avoid using their services. I confine my involvement with them to that which is commensurate with my professional responsibilities. 
 Last year, however, I had to bow to the inevitable and go to my local district hospital at Sandwell—it was subsequently declared a three-star hospital, although it is not in the first wave of applications—for major hip surgery. I assure hon. Members that as one lies on one's bed, nuzzling one's oxygen mask and caressing one's morphine drip, one has time to reflect on the benefits of the NHS. One also marvels at the huge range of professional skills that are needed for an effective hospital service. If one is not directly involved, one tends to think solely of doctors and nurses. Of course, many other skilled professionals are involved; radiologists, anaesthetists, physiotherapists and many others. 
 Many nationalities are involved in running the health service; I counted eight different ethnic origins. It struck me that people knew very little about their local district hospital unless they were involved either as a patient or as a professional. The new foundation hospital trusts could provide a valuable educational role in disseminating such information. 
 There must also be a means of monitoring how well hospitals are working with primary care trusts. Every area has its own health needs. In my area, low birth weight is a concern, as is the higher than normal incidence of early death from cancer and from heart disease, which is typical of inner-city post-industrial areas. In the first instance, that should be dealt with by primary care trusts, but services must be dovetailed with local foundation hospitals. Providing information on how that is to be done is essential in formulating a 
 comprehensive, effective health-care policy in the community. 
 The amendments are designed to promote the involvement of everybody so that health-care policies are truly reflective of the local community.

Patsy Calton: I support the Government in taking great steps to engage hard-to-reach groups. The hon. Gentleman's amendments would ensure that trust membership would give such groups access opportunity, and they are therefore to be applauded.

Adrian Bailey: I thank the hon. Lady for her kind words. The best way to ensure that inclusiveness results in the most effective policies is to ensure that appropriate information is available and that public awareness is raised about the running of hospitals. I hope that the amendments will achieve that.

Gareth Thomas: I support the amendments of my hon. Friend the Member for West Bromwich, West (Mr. Bailey). One of the main attractions of foundation hospitals is that they offer direct democracy and truly put the ''public'' back into public ownership. Fundamental to the democratic elements of foundation hospitals will be a thriving, active and substantial membership.
 I am tempted to look to my experience of local hospital issues and to reflect in particular on the experience of Mount Vernon hospital, which serves the northern part of my constituency. Had foundation hospitals existed in 1995, when the Conservative party did not oppose proposals to close the hospital's much loved and important accident and emergency unit, we would have been able to stop its closure by sweeping the board of directors out of office for having allowed such a horrendous proposal to have been introduced. 
 I am sorry, too, that foundation hospitals were not legislated for two years ago. Had they been, Hillingdon hospital NHS trust, which now controls the Mount Vernon site, might have had foundation status and could then have rejected outright the daft proposal introduced by Bedfordshire and Hertfordshire strategic health authority to move the cancer centre from the Mount Vernon site to the deepest, darkest corners of Hertfordshire. That would have spared my constituents much angst. However, I am delighted to say that there has been significant movement on that issue. The North West London strategic health authority is seriously considering whether the cancer centre can be retained to serve the needs of north London, perhaps as part of a wider cancer network. I welcome that.

Peter Atkinson: Order. The hon. Gentleman is straying wide of the amendments. He sounds more like he is taking part in an Adjournment debate rather than in a debate on amendments. I should be grateful if he would concentrate his remarks on the amendments.

Gareth Thomas: I am grateful for your strictures, Mr. Atkinson.

Chris Grayling: I fear that I might be straying by making this intervention. Does
 the hon. Member for Harrow, West (Mr. Thomas) envisage that the Bill's provision will provide a vehicle for local people to overrule strategic decision making in the NHS?

Gareth Thomas: I hope that in this case good sense will prevail. I am optimistic that a combination of good sense on the part of the strategic health authority and the power of local people's campaigning will achieve the result that the local community wants. In a case such as the one to which I have just referred, a thriving membership and active work by the local foundation hospital would not be necessary, because people would flock to join. Foundation hospitals generally need to take a much more active stance by recruiting a membership that reflects the community.
 My hon. Friend the Member for West Bromwich, West mentioned the mutual sector's considerable experience of recruiting and servicing large memberships. I am sure that foundation hospitals can learn lessons from that experience. The point of the probing amendments is to stress that membership recruitment must not be optional. It must be taken as seriously as the other requirements of achieving foundation status. 
 Amendment No. 216 envisages that making the active promotion of membership recruitment a legal duty would help to lock the issue into the minds of the key players in foundation hospitals. Amendment No. 217 seeks to enable members to have access to the information they need in order to play a proper part in running their local hospitals. The amendments are probing amendments, and I look forward to my hon. Friend's response.

Chris Grayling: I am delighted to hear from the hon. Members for West Bromwich, West and for Harrow, West that the two amendments are intended to be probing. I hope that the Under-Secretary, in considering them—and those that follow in the name of her hon. Friend the Member for Ealing, North (Mr. Pound)—will ensure that foundation trusts do not end up being required to produce an endless stream of reports, many of which no one will ever read and will impose significant burdens of time and bureaucracy on their medical teams.

Hazel Blears: I am delighted to welcome the points made by my hon. Friends the Members for West Bromwich, West and for Harrow, West. Both have extensive experience in the mutual movement, and I am sure that they can usefully and constructively inform our principles and practice in the matter. That will be crucial. My hon. Friend the Member for Harrow, West has, this year, done a magnificent job as president of the Co-operative Congress and has made a useful contribution.
 By establishing NHS foundation trusts, the Government are trying to create a new system of democratic involvement. We are progressing from consultation and engagement into direct elections, and that is a significant move. We have made it clear that we want the process to be as inclusive as possible, and my hon. Friends the Members for West Bromwich, 
 West and for Harrow, West referred to hard-to-reach groups, as did the hon. Member for Cheadle. I sometimes take issue with that phrase; if we engage in relevant issues, people will respond. People are sometimes hard to reach because we do not speak a language that they understand or because the issues are not close to their concerns. However, if local people have a real stake in an issue, they will respond and will want to participate, even if there are difficulties with mobility or language. I accept the points about ensuring that we support people with transport and translation of material, and that everything is as accessible as possible. 
 That is why we are determined to learn from the various groups involved. We have mentioned the external reference group, which comprises people from mutuals, from the Economics Foundation, and people from universities who are experts in drawing different groups into public involvement. Moreover, we have the experience of the Oxford, Swindon and Gloucester Co-op, which has a magnificent record on increasing active membership and which has made great strides in recent years. We can learn from the Royal Society for the Protection of Birds and the National Trust, each of which has an active and thriving membership. We should not rule out help from any sector. 
 We do not do this simply because it is the right thing to do. Hon. Members will recall the Wanless report on funding for the long-term future of the health service. In one of the report's scenarios, the public would be fully engaged in influencing health care, taking more responsibility for their own health and using technology to do so. Wanless saw that as the way to make our services much more responsive and to prevent the enormous rise in the cost of health care. Therefore, not only is it the right thing to do, it makes economic sense. 
 The amendments support the recommendation in the Select Committee on Health's report that foundation trusts should proactively attempt to extend registration to achieve real and representative community engagement. I agree with the Health Committee's sentiments and with the principles of the amendments tabled by my hon. Friend the Member for West Bromwich, West. The difficulty is that, as drafted, the amendments simply require reports to be presented; there is no corresponding duty on NHS foundation trusts to carry out active membership work. The effect desired by my hon. Friend would, therefore, not be achieved. 
 I am more than happy to consider these issues further and, if necessary, to make further proposals.

Adrian Bailey: Those reassuring comments from the Under-Secretary go further than the amendment asks. Therefore, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
"Question proposed, That the clause stand part of the Bill"

Andrew Lansley: I am sorry to impede progress, Mr. Atkinson, but it will only be for a moment. I simply want to ask the Minister a question about clause 10. Returns sent to Companies House include a whole series of financial information, and details of the
 directors are contained in the annual report. It will not surprise the Minister to learn that the disclosure of directors' home addresses is a matter of importance in Cambridgeshire, because of the work of Huntingdon Life Sciences and all the issues that flow from it.
 I am not going to dwell on all the problems associated with that. My question is simply this: will the disclosure requirements for directors' home addresses in relation to NHS foundation trusts be the same as for company directors, with the same exclusions as company directors, given that there are proposals—and others might be made—for work in other research facilities in the Cambridge area, some of which use animals? The question might arise in relation to the directors of an NHS foundation trust. What do the Government intend to do?

Hazel Blears: The hon. Gentleman has raised an important point. Clearly the situation has caused a great deal of distress to many people. My understanding is that the names of the directors and an address where they can be contacted, which would not necessarily be their home address, would be required for the register. That will meet the requirements of public accountability, but at the same time will provide a degree of protection.
 Question put and agreed to. 
 Clause 10, as amended, ordered to stand part of the Bill.

Clause 11 - Power of Secretary of State to give

Question proposed, That the clause stand part of the Bill.

George Young: We now come to financial matters. Clause 11 gives the Secretary of State powers to provide financial assistance to foundation trusts. It would be helpful at this stage if the Minister were to set out the framework for the debate on this part of the Bill, which is at the heart of the arrangements for foundation trusts. That would provide a framework in which to consider some of the other amendments.
 The question that I want to pose on clause 11 is quite simple. The whole point of becoming an NHS foundation trust is to access capital through the prudential borrowing code and from the private sector. A foundation trust would no longer get its capital allocations from the Treasury; that is the whole point. Under clause 11, the Secretary of State may give financial assistance to any NHS foundation trust. Can the Minister explain how the regime will work? 
 It cannot be the case that trusts would continue to get the capital allocations that they would have received had they not become foundation trusts. I understand that that flow of capital would cease and that trusts would then turn to the private sector—the City—to borrow what they could. Against that background, we need to know in what circumstances the Secretary of State could continue to give financial assistance to foundation trusts. Presumably they cannot have their cake and eat it, in that they cannot 
 continue to get what they would have received in addition to whatever they can borrow from the City.

Andrew Murrison: As the Minister will know, I have some first-hand experience of moneys being dished out to hospitals in trouble—or not being dished out to hospitals in trouble—as in the case of the Royal United hospital, Bath. I was somewhat surprised by the protective way in which the Minister has treated the public purse in respect of my local hospital. I am questioning the Minister because—given my experience and the experience that I suspect hospitals throughout the country have had—I am trying to get an idea of what circumstances the Minister can conceive of that would lead him to interfere in these new public benefit corporations to the extent of providing moneys from the public purse. How will that differ from the current arrangements, which, I have to say, work so poorly for my local hospital?

Andrew Lansley: I do not want to go on at length, but as clause 11 introduces the provisions on financial matters, it would be useful if the Minister could give us some indication of the nature of the capital regime within which NHS foundation trusts are going to operate before we discuss the borrowing powers and classification of capital as provided to NHS foundation trusts.
 I confess that my understanding of this is perhaps less than that of other members of the Committee. I am aware that hospitals receive capital from the Exchequer through a range of sources: there are strategic capital schemes, through which, following the approval of a business case, the Department provides three-star trusts with discretionary capital for particular purposes; operational capital is allocated by way of a formula rather than by approval of specific projects; the access fund is the provision of funds to hospitals following the achievement of certain activity targets; and the Modernisation Agency provides modernisation funding. 
 For the year ahead, £1 million—a three-star reward, as it were—has been built in to the external capital provision for Addenbrooke's. However, I am not sure that that money can be relied on for subsequent years. I would leave the Committee this morning with a spring in my step if I knew that the Department planned to provide an equivalent additional bonus for three-star trusts for the years beyond 2003–04. 
 I do not for a minute suggest that the availability of those sources of capital means that there will not be any requirement for additional borrowing. As I understand it, the point of the system is that we should be able to put additional capacity in place. Reading about the capital available to Addenbrooke's for 2003–04, I found it interesting that its proposed allocation of £7.5 million to capital projects was related to capital bids from the trust for £22.5 million. Indeed, to those of us who have been in business, the idea that a growing organisation with a projected turnover of £230 million in the year ahead should be growing, modernising and improving with £7.5 million of capital expenditure a year does not seem feasible. 
 My hope is that we will discuss how trusts will be able to access capital above and beyond that which is available through Exchequer sources. Before we discuss other aspects of capital, it might be useful to understand whether each of the sources of capital available to existing NHS trusts will be available on the same or similar terms to NHS foundation trusts.

Gary Streeter: I endorse my hon. Friend's request that the Minister helpfully set out the funding arrangements for foundation trusts. It is fair to say that foundation trusts will stand or fall, succeed or fail, not on whether the democracy arrangements work, but on whether the funding arrangements work. As the Committee looks forward to clauses 12, 13 and beyond, I ask the Minister to help us. Will he say a word or two about public dividend capital, which is mentioned in clause 11(2)? To my shame, all I know is that it is a scheme that operates in NHS trusts. It would help the Committee to understand a complex area better, and would also help me in putting future questions to him, if the Minister were to give an introduction to the subject in his response to the debate.

Peter Atkinson: I hear what the hon. Gentleman says. If it facilitates the Committee, I am happy to tolerate a wider-ranging debate on clause 11, provided that that is borne in mind and we do not repeat everything on clauses 12 and 13. Does that suit the Minister?

John Hutton: I am, as always, in your hands on such matters, Mr. Atkinson.
 Clause 11 is about the Secretary of State's ability to make loans, grants and other sources of finance available to NHS foundation trusts. Other parts of the Bill relate to public dividend capital, for example. With great respect to the hon. Member for South-West Devon, I must tell him that it is probably best to discuss public dividend capital when we reach those parts of the Bill—he can, of course, translate that to mean that that will be when I have better and further notes. I spent most of the night going through the material on public dividend capital, but I am none the wiser for it. Therefore I look forward to the debate on clause 13. 
 May I correct one point? There will be a different regime for NHS foundation trusts' access to capital; the right hon. Member for North-West Hampshire was right about that. However, he was not right to say that NHS foundation trusts would have no access to public sector capital. I think that the hon. Member for South Cambridgeshire was developing those points, and I will say more about that subject shortly. 
 We should be clear that clause 11 simply replicates the existing provisions for NHS trusts regarding the Secretary of State's powers to make financial support available to NHS foundation trusts. I will explain in a moment why flexibility and parallel sets of powers are needed. 
 The right hon. Member for North-West Hampshire was right, in a general sense, to say that what we are doing with NHS foundation trusts is a break with the 
 past. For example, they will have access to wider sources of funding to support their capital programmes, including funding from the private sector. That freedom is not exercisable by NHS trusts, as I will explain in a moment. 
 In general, an NHS foundation trust's future access to capital will depend on its ability to service debt, not on centrally controlled capital allocations. As is clear from the Bill, the amount that trusts can borrow will be determined by a formula based on each NHS foundation trust's ability to repay associated principal and interest. That will be dealt with by the prudential borrowing code. The regulator will set up a formula on which those decisions will be made, which in turn will depend on the strength of projected cash flows. 
 Each NHS foundation trust will calculate its borrowing limit, which will be confirmed by the independent regulator and will appear in the trust's terms of authorisation. Against that borrowing limit, foundation trusts will be able to raise finance from Government and private lenders to build new facilities and improve existing ones. However, they will not be able to use protected assets—which we will come to later in the Bill—as security for that borrowing, because those assets are necessary to preserve the continuity of NHS services for the public. 
 The failure regime later in the Bill is designed specifically to ensure that if there is corporate failure on the part of a foundation trust, NHS patients will not be the losers. We need a regime to protect and preserve those assets. Foundation trusts will, however, be able to use non-protected assets as security for that borrowing. Most importantly, the most likely source of security will be the associated revenue streams that will go with the commissioning arrangements that are made with primary care trusts. 
 The right hon. Gentleman asked from whom trusts would be able to borrow and how much it would cost. I am not sure that in the immediate short-term future—the next three, four or five years, for example—the private sector will lend a huge amount directly to NHS foundation trusts. Initially we expect that most, if not all, new borrowing will be sourced from a new financing facility that the Department of Health is establishing. Therefore we must ensure that the Secretary of State has the power to make loans available to NHS foundation trusts. That is another reason why clause 11 is in the Bill. 
 We intend independent credit specialists acting on behalf of the Department to operate this financing facility on an arm's-length basis. 
 Loan applications from foundation trusts will be assessed using generally accepted credit analysis principles. The specialists will not be subject to direction by the Secretary of State in determining loan applications. The analysis will be based on credit worthiness—for example, whether the loan is likely to be repaid—and not on policy-based assessments of the loan purpose, which is current practice. 
 All new loans will be based on the repayment of principal and interest. It is envisaged that the financing facility will set interest rates for NHS foundation trusts. For protected businesses—that is, core NHS 
 services—the interest rates will be set at the prevailing national loans fund rate, which is very favourable. I think that it is 3.5 per cent, but someone will be able to confirm the figure shortly. The interest rates for non-protected businesses such as subsidiary interests of foundation trusts, or joint ventures, will be set at a level consistent with private sector borrowing rates. Foundation trusts will pay the prevailing private sector interest rates for borrowing that they draw from the private sector. 
 I hope that access to public capital has been dealt with in those remarks. I should also let the right hon. Gentleman know that, as announced in the House before Christmas, we have already made three-year allocations of the operational capital that the Department makes available to the NHS. That includes the 29 applicants that are proceeding to the second stage of foundation trust status. Allocations of operational capital have already been fed into the system from public sector routes.

Gary Streeter: Will the Minister give way?

John Hutton: In a second. Operational capital is about only a quarter of the capital requirements of that NHS trusts. Those allocations have already been made, and the Government will certainly not be withdrawing them from NHS foundation trusts.

Gary Streeter: The Minister has virtually answered my query in his last half sentence. Can he assure me that the Government do not intend to withdraw existing streams of capital to hospitals that will become foundation hospital trusts, either within the three-year allocation cycle or thereafter? Is the extra borrowing capacity provided for in the Bill intended to provide extra resources, or do the Government intend to save their own money, so to speak, in years to come?

John Hutton: I can speak only about the three years for which allocations have been made. As regards wider access to public capital per se, however, there are some obvious areas for concern. Among those important services and systems that glue the NHS together, the need to upgrade the information technology infrastructure in the national health service is a priority.
 The operation of private finance initiatives in relation to NHS foundation trusts is another big issue. The Government want to ensure that sponsors and funders are left in no worse a position as a result of the introduction of the new legislation and the establishment of NHS foundation trusts. The Government are proposing that, in future, all Department of Health-approved NHS foundation trust PFI schemes will be under novation to the Secretary of State. PFI consortia will be in a direct primary contractual relationship with the Secretary of State. The Secretary of State will, in turn, appoint the NHS foundation trust—either as his agent or subcontractor—to perform the obligations arising under the contract on his behalf. There will, therefore, be no substantive change. 
 The question arises more widely about access to public money; for instance, for initiatives that might arise under national service frameworks or the need to 
 upgrade the information technology infrastructure of the NHS. In future, resources will be allocated mainly through the system by the new national tariff arrangements; that is true for NHS foundation trusts as well as those trusts that are not foundation trusts. If the Department requires NHS foundation trusts to procure a specific item—for example, in relation to a new initiative linked to implementation of a national service framework—the Department would have to fund it. Otherwise, the NHS foundation trust might not be in a position to participate. 
 The key point in relation to any central initiative such as this is that the relevant requirements should be set out in the terms of the authorisation, and I expect that they would be. If any public funds were made available for a central initiative such as information technology, NHS foundation trusts should have access to an equitable proportion of those funds. The Government intend that to be the case.

Andrew Lansley: The Minister has moved on to the relationship between the national tariff and the capital of NHS foundation trusts as distinct from non-foundation trusts. I thought that the Committee would deal with that matter later. My understanding is that the intention is to have a single national tariff. If, on the one hand, the tariff for NHS foundation trusts is designed to provide sufficient resources—not only to meet the costs of providing the service in revenue recurrent terms but to repay the capital costs of borrowing to support additional capacity—and, on the other hand, non-foundation trusts had not borrowed but had had their capacity provided by direct departmental capital grants, how does one equalise the national tariff? Will departmental capital grants to non-foundation trusts be capitalised on their balance sheets so that they have to repay the capital charge to the Department in the same way as foundation trusts would have to pay a private lender?

John Hutton: When we discuss the public dividend capital in clause 13, we need to deal with how capital is financed and how repayments are structured, because there is an overlap. The hon. Gentleman and I have a fundamental disagreement; namely, should there be a national tariff? He would prefer price competition among NHS providers to a national tariff.

Andrew Lansley: We are debating the Bill as it is, not as it might be.

John Hutton: There is nothing in the Bill about the national tariff. This clause is about financial flow arrangements. I should like it recorded in Hansard that the web site is a real peach. The hon. Gentleman should refer to it if he would like more information about financial flows.

Simon Burns: Is it more accurate than the No. 10 web site?

John Hutton: It is a good web site. It took me a while to access it, but it is well worth the effort, especially if one has trouble sleeping.
 The national tariff is not designed to give an unfair advantage to one set of NHS trusts over another. The intention is to fix a standard price for similar 
 procedures. That is what the healthcare resources group definitions set is all about. When a tariff is set, there should be no unfair competition based on reducing NHS quality of care. We have been there and done that, and it is a really bad place to go. My hon. Friend the Member for Cardiff, Central has some concerns about this, but we want to encourage efficiency and productivity. A national tariff can do that, because if an NHS trust or an NHS foundation trust can provide a service at a lower cost than the national tariff price, it can keep the difference between the national tariff price and the service price under which it can operate. There is clearly an imperative on, and an incentive for, NHS foundation trusts to operate at an optimum level and to use the proceeds and the benefits of that productivity to reinvest their savings and efficiency in the provision of NHS health-care services.

Evan Harris: On a point of order, Mr. Atkinson. I share some of the concerns of the hon. Member for South Cambridgeshire, in that amendment No. 247 asks some of the questions that the Minister is answering. I do not wish to interrupt his flow, but I wish to seek advice from you about how to deal with the matters in amendment No. 247, because the Minister may repeat something he has already said. Although not too much time has been invested in this debate, I should be grateful if you guided members on how to structure debates on the next clause, given the Minister's extensive explanation, which, by his own admission, covers many of the issues in clauses 12 and 13.

Peter Atkinson: These groups of amendments flow into one another, because they deal with financial matters. I said that I would be tolerant of a wider debate on clause 11, but that I would ask the Committee to keep to the subject when discussing clauses 12 and 13. When we come to amendment No. 247, the hon. Gentleman will be able to ask his chosen questions, but I shall insist that the debate is narrowly focused on that amendment.

John Hutton: I am grateful to you, Mr. Atkinson. If I strayed too widely, it was inadvertent, because I have not dealt with the hon. Gentleman's amendment No. 247. There is another argument that applies to that amendment, which I have not knowingly made yet.

Jon Owen Jones: Having set a tariff, would a foundation trust that is more efficient than others in a particular set of operations—my right hon. Friend the Minister has explained that such a foundation trust would be able to keep the excess proceeds—be able to do more operations because it could do them more efficiently? If not, what incentive would there be for commissioning bodies to go to the most efficient provider, since the tariff is going to be the same regardless of which provider they choose?

John Hutton: I agree that, by common consent, there is a weakness and a fault in the current method of commissioning care in the NHS. Most commissioning is based on block contracts that are not activity-based. In the current system, there is no incentive to do more, because people do not get paid to do more. That is
 ridiculous, and I am sure that many hon. Members will be surprised to learn that as a result, the available capacity in the NHS is not being fully utilised.
 It is important for the health of any organisation—be it in the private or public sectors—that its financial arrangements encourage the utmost efficiency and productivity and provide incentives for other organisations to reach the same level. With the best will in the world, the existing financial flows within the NHS do not do that. In future, there will be a direct incentive for providers—NHS foundation trusts and non-NHS foundation trusts—to do more, because they will be paid for the work that they do, which will be at the national tariff rate, and will retain the surplus proceeds, if there are any. We will encourage the fullest possible utilisation of NHS capital assets. 
 My hon. Friend the Member for Cardiff, Central wants a system in place within the NHS where money flows in a way that encourages innovation, efficiency and productivity; that is what we are proposing. We can achieve it without replicating the deficiencies and defects of the internal market of the Conservative party, which was structured fundamentally on a system of competition based on those who could provide the lowest cost to the NHS. That type of market, based on price competition alone, is bad for the NHS; it does not place the right emphasis on quality, and we must achieve that. That is partly why we have included the Commission for Healthcare Audit and Inspection and the National Institute for Clinical Excellence in the Bill; not to mention clause 40, the new approach to setting national standards, the stronger and tougher inspection regime for, for example, non-NHS foundation trusts, and the annual CHAI inspections of quality and performance. 
 All these things are important. However, I say to all my hon. Friends that efforts to improve NHS efficiency will not be at the expense of the values and ethos of the public service itself. Those of us on the centre-left of British politics must learn a lesson from the past; if we leave it to the Conservative party to control the language of choice, diversity, plurality, efficiency and productivity, we have sold out the centre-left case in Britain. Those are not Tory words; they should be Labour words.

Evan Harris: The Minister has given an interesting perspective on the way in which the Government want to use what I am happy to call the internal market—under the terms that he has used—and the split between commissioning and providing. However, if money is to follow not only price but efficiency and activity, the implication is that it might flow from places that are less efficient and active to those that are more so in a way that does not happen at the moment due to the block contract.
 My concern is about those providers that are unable to increase their efficiency or capacity because of factors beyond their control, such as supply of labour or capacity in the social care sector. They will lose funding that they do not lose at present, because of the greater flows. That will make their situation even worse because they will be less able to compete in the labour market. They will be less able to buy extra capacity because they will have lost the funds that they 
 had been accumulating in order to compete. That is our real problem with the beginnings of the operation of this flow.

John Hutton: That is precisely why we are not doing it with a big bang approach. We are starting with about 15 healthcare resources groups this year. There will be a gradual move to a wider application of the national tariff. On a point of clarification, the national tariff will encompass some of those regional cost pressures and differences that the hon. Gentleman mentioned; for example, the higher cost of labour in the south and south-east.

Chris Grayling: The Minister talked about the ability of foundation trusts to retain excess funds and invest them in improving patient service. It is clearly not his intention that non-foundation trusts can also retain that money to invest in patient service. How will he avoid the national tariff, by definition, imposing unfair competition between those who have the power to retain money and invest it and those who must return it to the Treasury?

John Hutton: That is why it will be a gradual process. It must be remembered that there will not be a full application of the national tariff system within our desired time frame for the establishment of NHS foundation trusts. We are alert to the issue that the hon. Gentleman mentioned, and there is a way through it.
 I apologise, Mr. Atkinson; the discussion has been rather wider than I intended, but I hope that it has been useful. There is one important issue for the Committee. I know that it is not in the Bill, but the funding flows of the national health service and the arrangements that any Government make will determine to a large extent the issue that clause 11 addresses, which is one of borrowing and the ability to service debt. 
 As I said, the overwhelming amount of resources for NHS foundation trusts will come from their commissioning arrangements with PCTs. The basis on which those commissioning arrangements are structured will have a direct impact on the level of borrowing of an NHS foundation trust, so there is a connection. 
 I say to the hon. Member for Oxford, West and Abingdon and the Committee that it is difficult to go down that road; I accept that. We are going to change the inertia in a system that does not provide incentives and, perversely, rewards the least productive parts of the national health service. However, we are not imposing some penal provision on NHS foundation trusts in the way that the hon. Gentleman has described. We are working with trusts through the additional resources, the extra support that CHAI is providing and the hospital improvement programme, about which my right hon. Friend the Secretary of State made a further announcement only a few weeks ago, with additional resources going to support those who are not performing to the extent that they should. 
 We want to bring the entire NHS up to an effective level of performance. That is our focus; we are not leaving behind those who are currently struggling with some of the problems that the hon. Gentleman 
 suggested. We seek to bring the NHS as a whole to a point at which it can benefit from the freedoms of the Bill and provide a better service to the public. 
 It is important that we do not run away from some of the difficult decisions that must be made. Let me be blunt; we should not have a system in which the least efficient and effective parts of the NHS are funded in the same way as the most efficient and effective. That is what we want to change, and we should change it. In addition, we should also make it clear to primary care trusts, as we have done, that they are free to commission from whatever provider is best in order to provide a service for their patients. That is also a very important point, because there is no better way to try to encourage stronger and better performance in the NHS than to make it clear to providers that there is no guarantee. We want to have a system that encourages good performance.

Jon Owen Jones: I want to emphasise the Minister's point. Not only does the current system treat inefficient areas the same as efficient areas, but, in order to make efficiency gains, there are short-term costs and difficult decisions to make. In a system such as ours that equalises payments, the difficulties of short-term costs are emphasised because there is no gain after they have been taken.

John Hutton: Sometimes there is a need to invest to produce efficiency and more effective services. I accept that. I cannot deal with specifics if my hon. Friend has a particular case in mind. However, I can strongly make the case on the generality that the capital investment going into all parts of the NHS is rising significantly. In addition to our funding streams, there is the Treasury's invest-to-save budget scheme, which is designed to deal with some of the points that my hon. Friend and others have made. This has been a wide-ranging debate.

Evan Harris: I accept that it is vital that commissioners have the freedom to choose from whom they commission services, and realise that they have and can use that freedom. That is how we will get a more responsive NHS. Does the Minister accept that equity is involved? For example, a commissioner may wish to commission services locally—even at a less efficient rate—to ensure that there is equitable access for those who are unable to travel to where there is a more efficient provider. Although it may not be his preference, does he accept that an alternative way of solving that problem is to allow commissioners to raise revenue locally in a democratically accountable way? He could put it to the people that they must pay a premium if they want local services that may not be as efficient as those elsewhere. If he does not do that and cuts back on the availability of central funds—which will dampen the market that he wants—how will he solve the problem of equity that concerns all of us on the centre-left?

John Hutton: Welcome to the centre-left. We could debate this until the cows come home, Mr. Atkinson; as you represent Hexham, that subject is perhaps closer to your heart than it is to mine.

Peter Atkinson: Sheep, actually.

John Hutton: Sheep, yes.
 The hon. Gentleman is right to say that primary care trusts themselves should eventually have the freedom to take decisions at an operational level, because they are the commissioning bodies. We have emphasised to primary care trusts that they should be free to commission from those that provide the best service. Issues of equity and access will prey heavily on the minds of primary care trusts, and it is right that they should. The national tariff will operate as I have described; not as a barrier to access, but as a way to improve it. Together with the other reforms that we are introducing, the tariff will add into the system a direct incentive for local providers to do more. 
 A primary care trust may be faced with the difficulty, which is often faced in various parts of the country, that it cannot get a service that provides rapid access to deal with, for example, the problem of long waits because of local shortages. If that is the case, it is important that it is free to commission a service from other parts of the national health service, or from other providers, to ensure that local people get access to NHS-funded care more quickly. That is a separate issue from the one that the hon. Gentleman raised about somehow withdrawing support from local providers. It is not about that; it is about commissioning an additional service. However, it is also about allowing the local provider an opportunity to provide that additional service, since a direct financial incentive is available to them. 
 I have said previously to the hon. Gentleman that the difference between us is that he represents in this place a set of very deep and conservative attitudes about the national health service that places the interests of producers and providers above the needs and interests of the patients. That is not just my view; it is the view of many of his hon. Friends. I see what is written about him and his Front-Bench performances in ''Focus'' and other magazines, in which he is regularly attacked as being an old-style politician who is not prepared to embrace change. I know that he is trying to learn the language of reform and change, and I will provide some seminars and support for him if he wants to attend. However, he is gradually edging in our direction, which is welcome. 
 I hope that the right hon. Member for North-West Hampshire—who started this debate by asking about the sourcing of borrowing and capital for NHS foundation trusts—has had some answers. It seems a very long time ago since I started to respond to him, and I have no memory at all of what I said. I will look in Hansard to see whether I answered him. [Interruption.] I see that he wants to have another go at me, so I am happy to give way.

George Young: I was not proposing to interrupt the Minister; I wished to come back after he had finished.

John Hutton: I misinterpreted the right hon. Gentleman's intention. I do not wish to go on any longer; I have run out of material. This is probably a good point at which for me to stop.

Chris Grayling: I had not intended to make a significant contribution to this debate, which spread
 wider than I anticipated. I shall save some points for the amendments that are to come, but I should like to deal with some of the Minister's remarks.
 The Department of Health has been setting up the special funding facility in recent weeks. Is that facility being set up with public funds rather than being sourced from the private sector? 
Mr. Hutton indicated assent.

Chris Grayling: I see that the Minister is nodding. If it is ring-fenced, with access decisions that are not in the gift of the Secretary of State, what is the Treasury's role in the distribution of that money? Is it genuinely an independent pot with an independent panel that has total freedom to allocate it to whoever it wants, or does some degree of control still rest with the Treasury?
 Is there a limit on the total amount of that money? Is it simply an initial amount that is available now, or is it a fund that will be expanded as time goes by? Will it be entirely dedicated to foundation hospitals, and is it the sole source of public capital moneys that foundation hospitals can access? What criteria will those distributing the money use in their lending decisions? Will they be using some of the criteria that are set out in the clauses concerning the prudential code? Will they be looking at the creditworthiness of the trusts? 
 A private-sector lender to an independent organisation would make judgments and set repayment rates against accepted assessments of creditworthiness. International organisations such as Dun & Bradstreet and Standard & Poor's specialise in producing such ratings. Is similar information being used in the distribution of this money? Does the Minister envisage such ratings being used in those assessments in future? 
 As regards this money—and, more broadly, the total borrowings that NHS foundation trusts can take on—will these funds appear as part of the PSBR? Are they official public sector borrowings or will they be purely on the balance sheets of the foundation trusts themselves? What provision is being made for any new entrants to the marketplace under clause 5? On what basis will those organisations that are not currently NHS trusts have access to that money if they apply for foundation status? Inside what time frame does the Minister envisage those organisations being in a position to access the funds available, if indeed—[Interruption.]

Peter Atkinson: Order. I am having difficulty following the hon. Gentleman. There are too many sedentary conversations going on.

Chris Grayling: The Chancellor of the Exchequer said recently that money borrowed by foundation trusts can only come out of the total pot of money available for borrowing in the NHS. Will the Minister clarify whether that money has been taken away from a general NHS capital pool? If it has, what proportion of that pool does it represent? Will the creation of this special funding facility impact on the availability of capital to non-foundation trusts in the coming financial year or in future financial years?
 I intervened on the Minister to express anxiety that we would be creating a situation in which foundation trusts would be at an advantage, owing to their ability to retain funding, and that we would be creating a two-tier system. Will the national tariff be introduced before all hospitals become foundation hospitals? In what time frame does the Minister expect all hospitals to become foundation trusts? Will the Minister set the introduction of the national tariff in context against 
 the process of expanding foundation trust status to other hospitals? If that is the case, will the Minister tell us what provision he expects to make— 
 It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
 Adjourned till this day at half-past Two o'clock.